Review the following articles and describe how they relate to the circular flow of income and expenditure. Describe some of the most popular imports Americans purchase and list where they come from.

1/10/2021

10 Financial resolutions for 2021 and how to fulfill them By Liz Hund (Chapter 5)

With the right plan in place, you can stick to your financial resolutions and end 2021 in a better place than you started. Here are 10 resolutions to make, along with tips on how to keep them.

Refinance your loans

While the coronavirus pandemic has wreaked havoc on many parts of life this past year, it has also prompted record low mortgage rates, making this a prime time to refinance and lower your monthly payments. As for student loan refinancing, federal student loans are in forbearance until Jan. 31, meaning interest is suspended and payments are not required. However, this does not apply to private student loans and you may want to consider refinancing these types of loans to lock in lower rates.

Pay down credit card debt

If you have credit card debt, consider making it a goal to pay it off. There are a few approaches you can take, but two common strategies are:

• Paying off your highest debt first (the debt avalanche method)
• Paying off your smallest amount of debt first (the debt snowball method).

If you're struggling with payments, consider credit counseling, a low-interest balance transfer, a personal loan or even debt settlement.

Automate your savings

One of the easiest ways to build your savings is automating your contributions. Most employers allow you to divide your paycheck into different accounts. If not, you can likely set up automatic transfers with your bank.

Start an emergency fund

In general, experts recommend saving three to six months of living expenses. Start by opening a separate and dedicated high-yield savings account. After that, consider these four tips:

• Evaluate your spending and look for areas where you can save.
• Set a savings goal.
• Set up automatic contributions.
• Increase contributions over time.

Boost retirement savings

Saving for retirement is one of the most important aspects of sound financial planning.

"Use 2021 to boost or maximize contributions to 401(k)s or HSAs, plot out holistic retirement goals and, no matter your age or life stage, take meaningful steps to boost your financial wellness," says Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America.

If your employer offers a 401(k) match, be sure you're contributing enough to get the full match since it's essentially free money. Also look at where your money is being invested. Many experts recommend investing in a diverse portfolio of assets to reduce your risk but still achieve attractive returns.

Invest more

Don't limit your investing to retirement contributions. If you already have an emergency savings account, consider setting up another account to invest for goals with specific time horizons, like early retirement or saving for a house.

If you're just getting started, you may want to look into a robo-adviser, which will do the investing for you after taking your risk tolerance and ideal earnings into consideration.

Improve your credit score

Your credit score plays a critical role in determining whether you get financial services you need. It can influence your car insurance rates in some states, as well as how much you pay in interest when you get a loan.

Visit annualcreditreport.com(Links to an external site.) to get a free copy of your credit report. You're typically able to access only one free report a year, but it's been increased to once a month until April 2021 as a result of COVID-19.

Paying all bills on time and in full and lowering your credit utilization ratio will increase your credit score. Consider taking advantage of score-boosting programs, like ExperianBoost, and don't apply for new accounts too often.

Cook more meals at home

This may be something you've already begun to do with many restaurants around the U.S. being limited to takeout.

Keep it going into 2021. You can make it fun (and easy) with meal subscription services that deliver perfectly measured ingredients straight to your door.

On the other hand, if you've turned to takeout during this time, give cooking a try and see how much you save. Put those savings toward debt or your emergency fund.

Update your beneficiaries

Have you experienced a life-changing situation recently? If you have, your beneficiaries might be out of date.

This includes your retirement and bank accounts, insurance policy and other financial accounts to make sure your beneficiaries are accurate.

Adding a beneficiary to your accounts is critical to ensure your assets will go to the person you intended them to. Additionally, it's important to note that beneficiaries trump wills, so make sure the two documents are aligned in their directives.

Diversify your income

"People are realizing that self-employment is not inherently more risky than traditional employment because there's built-in income diversification when you have multiple clients or customers," says Laura Gariepy, business coach and founder of Before You Go Freelance, a blog that offers advice for aspiring freelancers.

There's a variety of ways you can diversify your revenue streams. Freelance work is great for those who have a specific skill to offer others.

There are also less technical side hustles, like dog walking. If you have a bit more money to front, consider investing in rental properties.

https://journalnow.com/business/investment/personal-finance/10-financial-resolutions-for-2021-and-how-to-fulfill-them/collection_f6474c96-7d7a-5f24-9ab9-2324ab8d6718.html#1

Inflation Reports Throw Curve Ball for Fed Rate HikeAmbition

By Jon C. Ogg(Links to an external site.)(Links to an external site.) June 14, 2017

On a day when the Federal Reserve is expected to hike interest rates, investors, economists and business owners might wonder what lower inflation readings will do to the decision-making of Fed Chair Janet Yellen and her Federal Open Market Committee (FOMC). The news flow out of Washington, D.C., is dominated by the shooting of Republican Representative Steve Scalise and several other people, but the Fed's rate hike decision remains on the docket this Wednesday.

Inflation is up from a year ago, but it is not quite where the Federal Reserve wants it to be to justify a normalization from the current low-rate environment. We have now seen weaker readings in the Consumer Price Index (CPI) and the Producer Price Index (PPI) for May.

The Department of Labor reported that consumer prices were down by 0.1% on the month-over-month headline reading for May. That is down from a gain of 0.2% in April and is worse than the 0.0% consensus estimate from Bloomberg. The core CPI, excluding food and energy, was up by just 0.1% in May, worse than the 0.2% consensus estimate but matching a 0.1% reading from April.

Where inflation remains closer to the Fed's 2.0% to 2.5% target range is on the year-over-year readings. The CPI was up 1.9% on the annualized reading for May, under the 2.0% consensus estimate and under the 2.2% reading from April. Core CPI, again without food and energy, was up just 1.7% in May versus the prior year. That is lower than the 1.8% consensus estimate and was under the 1.9% annualized reading from April.

Overall, costs are weaker than Yellen and the Federal Reserve desire and are just not holding up to the 2.0% to 2.5% target range. Housing prices were up only 0.2%, the cost of medical care was flat, and communication costs remain weak as telecom carriers are doing endless discounting to lure customers away from each other. Apparel costs were down by 0.8% and transportation costs were down 1.4%. Energy prices were down 2.7%, and the cost of gasoline has chased oil lower with a drop of more than 6% at the pump.

In Tuesday morning's report, the monthly PPI was flat, rather than the consensus gain of 0.1% that was expected. That was also down from a 0.5% monthly gain in April. The monthly core PPI, which excludes food and energy, was up 0.3%, a tad above the 0.2% called for by Bloomberg but less than the 0.4% gain in April.

Annualized producer price data was up 2.1% in May on the headline and core readings from May of 2016.

Wednesday's economic data are not so catastrophic as to would block Yellen and the FOMC from doing what they want with a rate hike. That being said, inflation and growth readings had been stronger in the first months of 2017 than they are coming on now, and that makes the normalization of interest rates and an argument about how to unwind the Fed's $4.6 trillion balance sheet a tad more tricky for the remainder of 2017.

The last look on the CME FedWatch Tool had a 93.5% chance of a federal funds rate hike set for Wednesday, June 14. On June 9 that was closer to a 99% probability.

http://247wallst.com/economy/2017/06/14/inflation-reports-throw-curve-ball-for-fed-rate-hike-ambitions/

An Exploration of the Federal Reserve (System)

By Team Wall Street Survivor(Links to an external site.)(Links to an external site.) April 26, 2017

You might have an idea of what the Fed is, and what it does. Most people think it's a government organization - but that's not entirely true. The Federal Reserve is kind of like a Toyota Prius.....it's a hybrid!!! Actually, the Federal Reserve occupies a unique space, in that it has a hybrid structure. It's both public and private, like that lower back tattoo you accidentally got in Tijuana last spring break.

What is the Federal Reserve? The first misconception most people hold is that there is one single entity known as the Federal Reserve. Actually, the Federal Reserve is a system of twelve Federal Reserve banks littered around the country, as well as other privately-owned banks and advisory councils. The Federal Reserve is like the Wayans family of central banking, you thought you knew how many there were, but new ones keep popping up and surprising you.

The Fed is essentially the central banking system of the United States. It was created way back in 1913 after a series of financial panics. The need for a system like the Federal Reserve was highlighted during the Panic of 1907, where a number bank runs occurred. What is a BANK RUN you ask? A bank run is when everyone tries to get their money out of the bank at the same time. The scenes at a bank run are similar to those outside your local Walmart on Black Friday, except more rage and despair instead of consumerist-driven mania.

Banks don't typically hold all the money their customers leave them, instead they hold just a fraction and use the rest to fund their bank-like activities, such as making loans. Small banks will work with bigger reserve banks to provide them with liquidity (cash) if there's an unusual situation. Unfortunatly, during a bank run these reserve banks often forget to pick up the phone and the banks are left with nothing to give their panicking customers! Never fear the FED is here!!!! That's where the Federal Reserve comes to the party. They're able to act as a "lender" in these times of crises. Like the wealthy dad of a spoiled teenager, the Fed is always there to provide cash - even when no one else can or will.

What is the FEDS role? Aside from bailing out the banks, the Fed's role has expanded over the years. They are responsible for:

1. Regulating banks
2. Ensuring the stability of the financial system
3. Setting monetary policy and the fed funds rate.

The fed fund rate is the interest rate at which the Federal Reserve banks lend money out to other banks. By manipulating the fed funds rate, the Fed is able to control the liquidity in the banking system. Increase the interest rate, and it becomes expensive to borrow money, drying up liquidity. In order to ensure the stability of the financial system, the Fed also has control over the money supply.They are able to create or destroy money with the click of a mouse. This is done through something called "open market operations". Basically if the Fed wants to create money they simply purchase government bonds. The money is created by adding 1s and 0s to the Fed balance sheet. Its real money by the way, they earn interest on these bonds - which is how they make a profit, i.e. $101.5 billion in 2014.

Who owns the FED? Another misconception a lot of us have about the Fed is that it is owned by the Federal government. It's not hard to see why. It's called the Federal Reserve after all. In reality, the Federal Reserve is a weird public/private structure - having a foot in both worlds. Here's what we mean. Commercial banks are required to hold stock in the Federal Bank in their region. So the Fed is technically a private institution whose shareholders are other banks. So it's private? Yes.... EXCEPT the shareholders aren't allowed to buy or sell their shares and are required to invest 3% of their capital in the Federal Reserve System. Additionally, the members and chair of the Federal Reserve Board are both appointed by and have their salaries paid for by the government. Ok, so it's public? EXCEPT its monetary policy decisions don't have to be approved by the President or anyone else in government. Private? Yes.... EXCEPT they can be questioned by Congress over their actions. Not to mention that the U.S. government takes pretty much all the Fed's profits every year. HYBRID!!!

The fact is that the Fed exists to serve both national and commercial banks. It works to serve its shareholders - which could explain why their policies lean towards benefiting the banking industry. They don't receive funding from the government, making it more like an independent agency that pays tribute to the government in the form of a corporate dividend.

To Conclude.... There have been other central banks - simplified versions of the system we have today. Fear over a central bank consolidating too much power eventually meant that these early versions were scrapped. For a time the country operated without a central bank, from 1836 onwards. Eventually financial panic and bank collapses in 1873, 1893 and 1907 spurred the creation of the new central bank. At the time, between 1907 to its creation, there were two camps. The first favored a privately run central bank and the other camp wanted a public, government-run organization. The debates from that period shaped the Federal System we have today. A hybrid, not-quite public, not-quite private decentralized central bank that exists within the government and outside of it at the same time. Glad we cleared that up.

http://blog.wallstreetsurvivor.com/2017/04/26/exploration-federal-reserve-system

Stocks advance following better-than-expected inflation read Wednesday May 14, 2017 By Tim Paradis, AP Business Writer

Wall Street advances after better-than-expected consumer price report eases inflation concerns

NEW YORK (AP) -- Stocks steamed higher Wednesday after a better-than-expected report on consumer prices tempered some of Wall Street's concerns about inflation. The Dow Jones industrial average rose more than 100 points. The Labor Department's report that consumer prices advanced 0.2 percent in April after rising 0.3 percent in March appeared to alleviate Wall Street's worries about a big spike in prices due to the recent surge in energy costs. The decline in prices comes despite the largest jump in food prices in 18 years.

Wall Street has been concerned that higher food and energy costs are cutting into consumers' ability to spend. Any pullback is an unnerving prospect for investors because consumer spending accounts for about two-thirds of U.S. economic activity.

Marc Pado, U.S. market strategist for Cantor Fitzgerald, said the tame consumer prices reading, along with recent figures on productivity, indicate that businesses are swallowing some of the rising costs they face and not passing all of them to consumers. That's welcome news as consumers are facing higher prices in some key areas, like energy and food. "You have higher input costs but you're getting more out of your workers so therefore you're able to control your output costs," he said. "The economy is lean and mean and doing well even though on the demand side it's slumping."

In late morning trading, the Dow rose 111.55, or 0.87 percent, to 12,943.73. Broader stock indicators also rose. The Standard & Poor's 500 index rose 11.50, or 0.82 percent, to 1,414.54, and the Nasdaq composite index rose 22.54, or 0.90 percent, to 2,517.66. Light, sweet crude oil fell 71 cents to $125.09 on the New York Mercantile Exchange.

Bond prices ticked higher as inflation concerns eased. Rising prices can make fixed-income investments less attractive. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.90 percent from 3.91 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell. In corporate news, Macy's Inc. reported it lost $59 million in the first quarter because of weaker sales and costs tied to combining businesses. But the results topped Wall Street's expectations and the stock rose $1.32, or 5.5 percent, to $25.39.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 414.4 million shares. The Russell 2000 index of smaller companies rose 4.14, or 0.56 percent, to 740.99. Overseas, Japan's Nikkei stock average rose 1.18 percent. In afternoon trading, Britain's FTSE 100 rose 0.18 percent, Germany's DAX index rose 0.33 percent, and France's CAC-40 advanced 1.09 percent.

Indian inflation at 7-year high

Indian inflation has risen at its fastest rate in seven years. Wholesale price inflation rose 8.75% in the 12 months to 31 May, rising from the previous week's 8.24% and above analyst forecasts. The inflation rate is now at its highest since February 2001 and well above the government's target of between 5% and 5.5%.

The rising cost of food and oil are pressuring prices and interest rates are expected to rise. The central bank has already raised rates to combat inflation, lifting its key lending rate by 25 basis points to 8% this week, its first rise in a year. Analysts fear inflation could exceed 9%, a 13-year high. "With this kind of galloping inflation one cannot rule out the possibility of it touching double digits ... in coming months," said Rupa Rege Nitsure, chief economist at Bank of Baroda.

Political tension Ministers recently raised petrol and diesel prices by about 10%, sparking fears about fuel affordability and resulting in social unrest. India imports nearly 75% of its crude oil requirements but subsidizes the cost of domestic fuel products to help contain inflation and protect the poor. Oil prices are a sensitive political issue in India as even a small rise in the price of diesel can feed into much higher food and transport prices.

With the governing party is facing elections in a number of states this year, the Congress party-led federal government had been wary of increasing fuel prices for fear of antagonizing voters. But India's three state run-oil importing, refining and marketing companies have been losing huge sums of money as they have been unable to raise prices. Energy costs make up 14.2% of the inflation index. In addition to fuel and food price rises, some analysts have forecast that transport and feedstock costs will rise within the next two to three months.

Published: 06/13/2008

Indian inflation at record levels

There are growing fears that further rises in Indian interest rates will be needed after inflation hit its highest rate since records began 13 years ago.

Wholesale prices went up by 11.42% in the 12 months to 14 June, which was higher than had been expected. Earlier in the week, the Reserve Bank of India (RBI) raised interest rates from 8.0% to 8.5% in an attempt to keep inflation under control. It was the second increase in interest rates in two weeks. The government has cut duties on items such as crude oil as well as cutting exports of rice to try to keep prices down, but interest rates are still expected to have to go up again. "We expect inflation to head higher in the coming months and peak somewhere between 12 to 13%," said A Prasanna from ICICI Securities. "In order to reinforce its policy stance, the RBI will hike rates in the course of the year."

Published: 06/27/2008

Japan's wholesale inflation rises

Japanese wholesale prices reached a 27-year high in June, spurred by high crude oil prices and the rising cost of raw materials such as steel and grain.

Prices rose 0.8% from May and grew 5.6% year-on-year, marking the biggest annual hike since February 1981. Despite rising prices, the central bank is wary of increasing interest rates and sparking an economic slowdown. The Bank of Japan policy board is due to meet next week to make a decision on interest rates. However analysts said they expected the rate to be held at 0.5%

Deepening gloom "We still think the recent rise in price data are unlikely to prompt the bank of Japan to raise rates," said economist Junko Nishioka at RBS Securities. "The Bank of Japan is focused more on the negative impact of the price rises on demand, rather than the possibility of continuous inflation pressure," he said. The latest data has deepened the gloom surrounding many of the country's firms which have seen their profit margins hit hard in recent times. Last week a quarterly survey by the Bank of Japan showed that in June, Japanese manufacturers were at their least confident in five years. Several companies have found it difficult to pass on higher prices as Japanese consumers worry about higher fuel and food prices and keep a careful eye on spending.

Published: 07/10/2008

China inflation hits 11-year high

China's inflation hit 7.1% in January, the highest rate for more than 11 years, official figures show.

The rise in consumer prices was driven by an 18.2% increase in food costs over the same period a year ago, the National Bureau of Statistics reported. Inflation in China continues to rise despite measures by the country's leadership, which hopes to keep a lid on the cost of food in particular. Rising food costs have been blamed on the harshest winter for decades. Massive snowfalls wrecked crops and killed millions of livestock. But analysts caution that the severe weather is not the only factor behind rising food costs, and warn further increases are likely to be ahead.

Unrest The January rate of 7.1% was up from 6.5% in December - and was the highest figure since September 1996, when consumer prices rose 7.4%. Non-food inflation only crept up in January, rising 1.5% over a year beforehand, the official figures showed. The rise in food costs poses a problem for leaders in a country where such rises are historically linked to social unrest, say correspondents. Measures taken by the government include giving farmers incentives to rear more pigs. Last year, the government also raised interest rates six times in a bid to keep inflation under control. Analysts said in light of the latest figures they expected the government to continue with a tight monetary policy.

Published: 02/19/2008

China's April inflation rises to 8.5 percent By Joe Mcdonald, May 12, 2017 AP Business Writer

China's inflation rebounds to 8.5 percent despite efforts to cool price increases

BEIJING (AP) -- China's inflation rebounded in April to near decade-high levels, adding to pressure on Beijing to cool rapid price rises and avert possible unrest ahead of the Summer Olympics, according to official data reported Monday.

Consumer prices in April were up 8.5 percent compared with the same month last year, the National Statistics Bureau reported. That was up from March's 8.3 percent rate and just short of February's 8.7 percent, the highest inflation in 12 years.

Consumer prices have jumped since mid-2007, driven by rises in food costs that hit 22.1 percent in April. The government has been trying to cool price rises for pork, grain and other items by increasing supplies and has imposed controls on basic goods.

"We believe the April inflation data suggests that it is still far too early to claim success in the battle against inflation," Goldman Sachs economists Yu Song and Hong Liang said in a report to clients.

Also Monday, the government reported that China's trade surplus fell about 1 percent in April from the same time last year to $16.8 billion amid weaker global demand for Chinese goods.

The trade surplus with Europe jumped by 34.8 percent to $12 billion, while that with the United States saw much slower growth, rising by 4 percent to $13 billion, according to the Chinese customs agency.

The growing Chinese trade gap with the 27-nation European Union has prompted the EU to join Washington in lobbying Beijing to ease currency controls and import barriers.

The surge in exports to Europe is due in part to the rise in the euro against China's currency, the yuan, which makes Chinese goods more attractive to European consumers. The dollar, by contrast, has fallen against the yuan, making Chinese goods more expensive for Americans. Soaring food prices are especially worrisome to Beijing because they hit China's poor majority hardest.

There have been no reports of demonstrations, but bouts of high inflation in the 1980s and '90s set off protests -- an embarrassment that communist leaders want to avoid ahead of August's Beijing Olympics, which they hope will showcase China as a prosperous, stable society. A senior economic official, Vice Premier Wang Qishan, said Friday that Beijing will stick to tight monetary policies to prevent inflation from escalating. But he announced no new initiatives.

Beijing is trying to cool a boom in lending and investment that it worries could fuel broader inflation. It has raised interest rates repeatedly over the past two years and tried to curb credit growth by forcing banks to set aside more reserves. Prices began to rise in mid-2007 as China ran short of pork, grain and some other basic goods.

The government has assured the public that China has enough grain and is paying farmers to raise more pigs. But efforts to boost food supplies were hampered by China's most severe winter storms in decades, which wrecked crops and disrupted shipping. The sharpest inflation has been limited to food but the costs of raw materials and energy are edging up, raising pressure for producers to pass on rising prices to consumers.

April's nonfood inflation was 1.8 percent, matching March, which was the highest in more than a year, according to the government data. The rate stayed at or below 1 percent through 2006 and 2007. Producer prices rose 8.1 percent in April, driven by rising energy costs, according to the government. April's 22.1 percent rise in food costs was fueled by a 68.3 percent jump in the price of pork, 46.6 percent in that of cooking oil and 13.6 percent for fresh vegetables.

National Bureau of Statistics (in Chinese): http://www.stats.gov.cn(Links to an external site.)(Links to an external site.)

Zimbabwe inflation hits 100,000%

Zimbabwe's soaring inflation hit an annual rate of 100,000% in January, new official figures show. Ongoing shortages of food and fuel helped drive inflation from December's rate of 66,212%. Government officials say the shortages make it hard to work out inflation with any degree of accuracy. About 80% of the country's population lives in poverty and it is estimated that three million people have left the country for a new life in South Africa.

New notes The economy has been in trouble for seven years, with supplies of basic foodstuffs, cooking oil and petrol all running low. The central bank has introduced new banknotes to cope with the spiralling prices. Last month it issued a 10 million Zimbabwe dollar note. President Robert Mugabe stands for re-election next month. He faces a challenge from his former finance minister, Simba Makoni and the leader of the opposition Movement for Democratic change, Morgan Tsvangirai.

Published: 02/20/2008

Zimbabwe inflation hits 165,000%

Zimbabwe's soaring inflation hit an annual rate of almost 165,000% in February, official figures show. Continuing shortages of food and fuel helped to push up inflation from January's rate of 100,000%. Government officials say the shortages make it hard to work out inflation with any degree of accuracy. About 80% of the country's population lives in poverty and it is estimated that three million people have left the country for a new life in South Africa.

New notes The economy has been in trouble for several years, with supplies of basic foodstuffs, cooking oil and petrol all running low. The central bank has introduced new banknotes to cope with the spiralling prices. Last month it issued a 10 million Zimbabwe dollar note. The leadership of Zimbabwe is in doubt following elections last month. Opposition leader Morgan Tsvangirai will not contest a run-off election unless certain conditions are met, a spokesman for his party says. Mr Tsvangirai's party, the Movement for Democratic Change (MDC), believes he won last month's election against President Robert Mugabe